ECB faces speculation over market intervention after French elections

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Bank has ‘transmission protection instrument’ in its armoury to help Eurozone countries in crisis by buying up their debt

The European Central Bank is facing mounting speculation that it could intervene if the French election triggers widespread market panic, as policymakers prepare for their annual conference in Portugal next week. French bonds have been sold off in recent weeks as investors fear that Marine Le Pen’s far-right Rassemblement National or the leftwing Nouveau Front Populaire alliance will win a parliamentary majority in the upcoming elections.

5 per cent of gross domestic product, well above the 3 per cent limit under EU rules. Some assume this means France is already excluded. “It would be illegal for the ECB to use the TPI in the case of France,” Eric Dor, an economics professor at the IESEG School of Management in Paris, wrote on social media site X. Yet ECB officials are privately confident they have enough wriggle room to use the new scheme even if a country like France is officially judged to be breaching EU fiscal rules.

 

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